Correlation Between Element Solutions and Core Molding
Can any of the company-specific risk be diversified away by investing in both Element Solutions and Core Molding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Element Solutions and Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Solutions and Core Molding Technologies, you can compare the effects of market volatilities on Element Solutions and Core Molding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Element Solutions with a short position of Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Core Molding.
Diversification Opportunities for Element Solutions and Core Molding
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Element and Core is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Element Solutions and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and Element Solutions is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Element Solutions are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Element Solutions i.e., Element Solutions and Core Molding go up and down completely randomly.
Pair Corralation between Element Solutions and Core Molding
Considering the 90-day investment horizon Element Solutions is expected to generate 0.68 times more return on investment than Core Molding. However, Element Solutions is 1.48 times less risky than Core Molding. It trades about 0.11 of its potential returns per unit of risk. Core Molding Technologies is currently generating about -0.15 per unit of risk. If you would invest 2,517 in Element Solutions on November 3, 2024 and sell it today you would earn a total of 63.00 from holding Element Solutions or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Solutions vs. Core Molding Technologies
Performance |
| Timeline |
| Element Solutions |
| Core Molding Technologies |
Element Solutions and Core Molding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Solutions and Core Molding
The main advantage of trading using opposite Element Solutions and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Solutions position performs unexpectedly, Core Molding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Core Molding will offset losses from the drop in Core Molding's long position.| Element Solutions vs. Oil Dri | Element Solutions vs. Quaker Chemical | Element Solutions vs. Ecovyst | Element Solutions vs. Minerals Technologies |
| Core Molding vs. Innospec | Core Molding vs. H B Fuller | Core Molding vs. Quaker Chemical | Core Molding vs. Minerals Technologies |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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